Why is the value case behind PLM still not clear to many organisations?

PLM Pulse is the first industry-led survey hoping to shed some light into where we are in our PLM journeys and where the real value lays. It is not meant to be an academic or consulting research paper, but rather a temperature check of how industry sees PLM today – the pulse.

In this article, we will explore the second question why “The value case behind PLM is still not clear to many organisations.” This article is not intended to be conclusions to the question or a detailed research findings, but more observations from industry professionals in the PLM space – our food for thought.

Over many years various colleagues and I have developed multiple business cases to support investments in PLM. The rationale for each case has varied tremendously depending on the business issues at the time. All too often they boil down to a “we just need to do it” moment. I fondly remember a hand-written note by famous British inventor on the PLM CapEx form: “We must proceed, but this is not the panacea to issues”!

So is it easy to justify a significant investment in PLM and are they really tangible to demonstrate? What are the barriers to a positive return on investment and have the solutions offered by the vendors made the investment easier?

Justifying PLM investments is hard and it is a thorny subject. The benefits are often intangible, the initial investments in software and infrastructure too high and when the potential disruption to the business is factored in, so are the financial risks. When researching this short piece, I was surprised how many websites and articles were written before 2012 and how little has been written after, are we stuck in a time warp or have we just given up?

We have all seen the reports that quote improved “speed to market”, “reduced risks and errors” during the design cycle or improved “engineering efficiency”. The issue most companies have with these benefits is they are intangible and difficult to measure. I rarely seen a PLM project that actually resulted in a headcount reduction in Engineering and very occasionally are the benefits measured. So, we end up writing cases which either justify a reduction in the IT costs due to consolidation or just agreeing that we must do the investment.

PLM in general is seen as a complex, risky and expensive tool to implement. Typically it is the tool which is the focus of the investment and business case – how “PLM Software” will help us improve. But little time is actually spent on the process transformation and the benefits which they will bring. Of course, the multiple Visio diagrams will show what the process looks like today (as-is) and what it will look like in the future (to-be), but those benefits are hard to visualise and even harder to measure and attribute to PLM.

A barrier to a positive return on investment for PLM projects is both the scale of the investment and the time taken to implement. The traditional models of buying the licenses up front (possibly 12-18 months before go-live) and the need to pre-invest in the infrastructure just kills projects before they start.

We have seen the software vendors move to new license models which reduce this big spike in investment at the beginning. The “renting” or “subscription” models look good on the financial paper, but do they offer companies the real flexible to grow and shrink with this business demands and needs? I often hear that whilst in the short term they may be cost effective, in the longer term they exceed the cost of perpetual licenses. Is this the way forward to improve the return for the projects?

To help reduce the investment in complex and expensive infrastructure, new cloud based solutions are available from the vendors. These again offer a must lower cost and scalable option over the traditional route. The concerns I hear though are of the maturity of these solutions, their ultimately flexibility and reliability for an organisation and finally security. Are we ready to trust the most precious information and assets of our business in the cloud?

This is our food for thought, now it is time for you to have your say. We have posted the anonymous PLMPulse survey on to get your feedback on the topic.